Independent experts give green light to Lib Dems' Local Income Tax

1.24.04pm GMT Tue 8th Mar 2005

Lib Dem Councillor Arnie Gibbons has welcomed further independent support for Liberal Democrats' proposals to replace Council Tax with Local Income Tax.

The much respected independent think tank the Institute for Fiscal Studies has published its findings, after a detailed study of the Liberal Democrats' proposals, showing that Local Income Tax is workable and would be a fairer system of tax.

The study shows that: Local Income Tax is workable The rate necessary to replace Council Tax with Local Income Tax would be a little under 4p in the pound A pensioner couple on about £ 14,500 income would save £ 1,100 a year A single teacher on £ 22,000 would save more than £ 600 a year An average household with two earners would save £ 500 a year 7 people out of 10 would pay about the same, or less; only the highest paid 3 people in 10 would pay more A Cabinet Minister on £ 130,000 a year would pay about £ 2,000 a year more Replacement of Council Tax with Local Income Tax, set by councils but collected by the Inland Revenue, would save around £ 300 millions a year in collection costs

Councillor Arnie Gibbons, Executive Member for Finance Said

"Council tax hits the poorest members of society hardest. Local Income Tax is a fairer system and this independent survey confirms that it is workable.

"We believe that Council Tax is unsustainable and with the Labour government planning re-valuations after the election many people could be even harder hit. Now is the time to push for Local Income Tax that would cut bureaucracy and provide a fair, sustainable way of financing local government."

Last year, the independent Chartered Institute of Public Finance Accountants (CIPFA) came to similar conclusions, in evidence to the Government's Balance of Funding Review.